People disappointed by modest drop in fuel prices
  • | nld, | April 11, 2013 03:35 PM
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The latest retail fuel price adjustments did not receive a warm welcome by consumers, as the reduction was small in comparison with recent hikes, which brought prices to a record high just two weeks earlier.


 Fuel price increased by VND1,430 then lowered by only VND500 per litre

In the first three months of 2013, the ministries of Finance and Industry and Trade adjusted fuel price four times and let petrol companies increase their compensation rate from price stabilisation fund.

As of March 28, though the price of petrol on the world market has been declining, the price stabilisation fund was exhausted. The ministries then reduced the compensation rate to VND300 per litre.

In the most recent price adjustment, on April 9, petrol companies announced a modest decrease of only VND500 per litre for A92, VND450 per litre for kerosene and diesel.

Nguyen Anh Tuan, deputy head of the Price Management Department under the Ministry of Finance, said at the regular press conference on April 10 that the price had been adjusted in accordance with regulations. The average world price over a 30-day period was VND415-481 per litre lower than current retail prices.

Many economists have said that prices should be further lowered and that the state must ensure the transparency of the fuel pricing mechanism.

According to economist Ngo Tri Long, the problem does not stem from the fact the decrease was so small, but the timing. "The pricing of fuel has never been tranparent. Sometimes retail prices are calculated on average 30-day world price, and sometimes it's 20 days. We must make clear on when it is proper to either increase and decrease fuel price." Long said.

Economist Pham Chi Lan said, "A decrease of VND500 per litre is nothing compared to the price hikes we've seen recently, such as the increase of VND1,430 per litre on March 28." Lan went on to say that the previous hikes were unreasonable because at a time when world prices were falling.

She said that it appeared that the ministries were trying to correct for this, but that the downward adjustment should have gone farther. "The ministries of Finance and Industry and Trade have continually claimed that the fuel pricing is transparent. But they need to be transparent to consumers, not just ministers," Lan added.

Economist Le Dang Doanh agreed and said they should make changes to Resolution 84 on the operational mechanism guiding petrol and oil companies. "Consumers have been greatly affected by these sudden increase, only to see a slight decrease afterwards," he said.

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